Kartu Money Laundering Issue Smells of Politics
27 October, 2011
Kartu Money Laundering Issue Smells of Politics

Money laundering suspicion regarding the Kartu Bank that is owned by Georgian tycoon Bidzina Ivanishvili, who recently declared about his political ambitions to run for presidential elections in 2013, smells of politics rather than a crime. 

Georgian law enforcers caught the encashment group of Kartu Bank red-handed in an alleged money-laundering attempt on October 18, 2011 when the group completed a usual transaction of encashment of USD 2 million and EUR 1 million at the Bank of Georgia (BOG) through their

partner banks of Deutsche Bank Trust Company Americas, Citibank International and Commerzbank in the US and Germany respectively.

Kartu was accused of money laundering; the money was apprehended and the criminal case was opened. BOG stepped aside as an innocent party.

Shortly before the alleged crime, top management of Kartu, which have been running the office for 10 years already, quit the bank on the same day after Ivanishvili accused Director General of squealing on the bank’s activities. Based on these two suspicious circumstances, National Bank of Georgia (NBG) decided to assign a two-month temporary administration in Kartu to research the internal problems at the bank.

Although, in its official statement the NBG accentuated that lately it regularly monitored Kartu but it found no particular infringements.

According to Davit Narmania, Board Chairman of the Center for Economic Problems Research, it is impossible that Kartu, which the NBG has been supervising periodically, could undertake money laundering. He doubts the matter has political lining since it coincided with political reanimation of Ivanishvili, who declared about his political ambitions on October 7, 2011.

Giorgi Kadagidze, President of the NBG, ruled out political lining of the alleged crime and stressed that encashment of USD 2 million and EUR 1 million is not an ordinary deal especially for salary needs [as the media reported new Kartu management’s words] as far as salaries in Georgia are paid  in national currency via non-cash plastic card-based transfers.

Besides, usually encashment of big sums is transacted through the NBG and Kartu might solve the problem at the NBG but it did not apply to NBG, Kadagidze accentuated in his repeated official statements released on October 19-20, 2011.

Nodar Javakhishvili, a newly assigned Director General of Kartu Bank, counters that the reason of big sums encashment was a political crackdown on Kartu clientele who started to withdraw money from their accounts.

“To meet this demand we had to back our cash office through such ‘extraordinary’ sums,” he told Georgian Journal.  “And not for the salary needs as my words were misinterpreted…the Kartu implemented this kind of encashment operations about 200 times this year without any accident. Not of such big quantities but in June we implemented USD 4 million worth encashment and the NBG did not even take any notice unlike this precedent. ”

Encashment transactions in compliance with Georgian law are allowed through both NBG and inter-bank operations but the difference is that inter-bank transactions are free of charge while the NBG charges this kind of deals; therefore banks prefer inter-banks deals. So did Kartu.

According to Soso Tsiskarishvili, an economic-political expert, if money laundering really took place it was the BOG that should be accused in the crime first of all since the suspicious cash was taken from BOG that is not involved in the criminal case as yet.

However, Kadagidze has no questions with the BOG as yet for he finds it to be just “a transit chain” although he promises to get interested if questions arise in respect of BOG.

What makes experts suspicious over the ad-hoc anti-laundering operation implemented by the task force of the Interior Ministry is the fact that internationally renowned financial organizations like Deutsche Bank Trust Company Americas, Citibank International and Commerzbank with much more developed anti-money laundering systems did not get suspicious. The NBG did not explain this gap in the logical chain of the Kartu ‘criminal story’ irrespective the GJ inquiry. Also, it does not disclose the source that reported the suspicious activity to the law enforcing body.

According to the currently activated anti-money-laundering law, all financial institutions are obliged to report suspicious deals to the Financial Monitoring Service, the anti-money-laundering body with the NBG, which accordingly gives the signal to the Prosecutors’ Office and law enforcers. Neither the NBG nor BOG makes statements to this end.

Narmania believes that cash at a commercial bank cannot be particularly suspicious if due documentation identifying the money origins and destination to a concrete commercial bank is attached to it.

Print
Other Stories
Georgian citizens are granted the right to work in France
The French Embassy in Georgia made remarks on granting Georgian citizens the right to work in France
The New York Times: Bitcoin declines but Georgia still bet on it
The New York Times has recently published an article about reasons, challenges and causes of generating Bitcoin in the former Soviet country Georgia.
EU to allocate € 13 billion for Eastern Partnership countries, including Georgia
The European Union together with the World Bank plans to allocate investment worth € 13 billion for infrastructure projects in the Eastern Partnership countries.
Anaklia Port and its importance for Georgia
In 2016, Anaklia Development Consortium was authorized to launch the construction of Anaklia Port.
Cryptocurrency mining threatens electrical network in Abkhazia
In the breakaway region of Akbhazia rampant cryptocurrency mining is threatening the shaky electrical network, reports an article of the news portal EuroNet.
Caucasus Wine University to be opened in Gurjaani
In the Kakheti region a new viticulture campus of the Caucasus University is in the process of planning.
Photos describing life of the poorest in Georgia
Fight with poverty should be among top priorities of every government in every country.
Training farmers to rescue the organic hazelnut production in Georgia
Even drizzling rain and unpleasant gusts of wind can’t prevent the farmers from coming and participating in the agricultural training.
Bleak times for organic farmers in Georgia – but there is hope
Organic hazelnut production is a delicate plant in Georgia that has emerged just a couple of years ago. Various pests, among them the Asian stink bug Parosana, trouble hazelnut farmers and menace their livelihood – even before their businesses could really take off.
Hybrid car imports are going through the roof in Georgia
Thanks to their fuel economy, the popularity of hybrid cars is increasing in Georgia, where fuel affordability is low and prices for fuel are unstable.
The New Year offer from MAQRO Construction - Apartments with unbelievable discounts and the parking spaces for FREE!
Location, green yard, spaces for various needs, experience of the construction company and parking space are the main important criteria for potential buyers of apartments.
Interview with the co-founder of Kiwi Vegan Café – the first vegan place in Tbilisi
Behind the Kiwi Vegan Café stands a group of activists who wants to raise Georgian’s awareness for animal rights and welfare.
Biblusi opens first shop for tourists - Georgian
The largest book shop in Georgia Biblusi opens the first shop specially designated to the needs and interests of tourists and named it Georgian.
Georgia improves by five ranks in the Prosperity Index
In the overall Prosperity Index rankings, Georgia has climbed by 5 positions from 85 to 80 when compared to last year. As such, Georgia is the best performing country in the CIS zone.
The future is bright for electric cars in Georgia
The numerous hybrid cars in the streets of Tbilisi cannot be overlooked. Entrepreneur Sulkhan Gvalia calls them “pagers”, referring to the predecessor of mobile phones.
Georgia’s fight against the big tiny enemy – Asian Parosana
It’s a tiny creature, but the harm it did to the Georgian agriculture sector was and still is immense.
New cable route: from Kobi to Gudauri in 15 minutes
On the 15th of December, cable transport is scheduled to be opened connecting Kobi and Gudauri.
Tourist boom in Gudauri – majority of hotels are booked by foreigners
Gudauri is among the most popular winter resorts in Georgia.
Medical tourism increases in Georgia
In the last 9 months, Georgia was visited by 19 500 foreigners for medical and recovery purposes.
Doing business in Georgia has become easier than in America
According to the Doing Business 2019 report published by the World Bank, Georgia ranked 6th among 190 countries in terms of simplicity of doing business. This was an improvement over two ranks compared to last year.
Problems that foreigners frequently face in Georgia
The importance of Georgia as a tourism hub is growing year after year.
Tbilisi TV Broadcasting Tower – Better than the Eiffel Tower?
It is planned to renovate the Tbilisi TV Broadcasting Tower, one of the landmarks in the capital.
Georgian Fusion Menu by The Biltmore Hotel Tbilisi
5,895,914 international visitors have visited Georgia between January and August of 2018. Compared to the previous year the number has increased by 12.2 per cent.
Advertising of gambling and lucrative games may become banned in Georgia
Advertising of gambling and lucrative games may become banned in Georgia. Those who violate the new rule would be fined GEL 10 000.
Lebanese café-lounge Beirut opens in Tbilisi
What is necessary to organize an unforgettable event? – Fun, emotions, lots of surprises, good music and delicious menu.
PHOTO OF THE DAY
GEL Exchange Rate
Convertor
21.02.2019
22.02.2019
USD
1
USD
2.6574
2.6570
EUR
1
EUR
3.0146
3.0128
GBP
1
GBP
3.4629
3.4714
RUB
100
RUB
4.0421
4.0560
Other Stories
Recently Toyota rolled out Global Campaign under this slogan that reflects the Olympic and Paralympic Spirit of Encouragement,
A couple from Switzerland combines Swiss tradition and technology with Georgian products. Their cheese is made in the Georgian mountains and sold in local stores and hotels.
It has been more than five years since the residents of Lilo village, near Tbilisi, cannot open their windows.
63 000 GEL was received by the Georgian Agro Export Group which is just a small part of the European Neighbourhood Programme for Agricultural and Rural development.
Georgian entrepreneur Guka Tavberidze, who runs his own business in the UK and does it quite well, has been invited by BBC
The grand opening of 7-star The Biltmore Hotel Tbilisi took place in Georgia’s capital on July 31.
DUSHETI, Georgia – The Georgian government and the World Bank will allocate USD 5.6 million (12 million GEL) to fund
A new Georgian clothing brand named Person has emerged in Georgian market.
Georgia is in the midst of an economic maelstrom, Euronews reports.
Situation at Georgia’s mineral water market is interesting: over the last year, the volume of export has grown by 56 percent. According to “GeoStat”, over $114 million worth of mineral water was sold
GEL Exchange
USD
1
USD
2.6570
EUR
1
EUR
3.0128
GBP
1
GBP
3.4714
RUB
100
RUB
4.0560